Bear of the Day: Starbucks (SBUX)

Starbucks SBUX is a roaster and retailer of specialty coffee globally. In addition to its coffee offerings, the company provides a range of complimentary food items and a selection of premium teas and other beverages, sold primarily through its retail stores.Analysts have taken their earnings expectations lower, landing the stock into an unfavorable Zacks Rank #5 (Strong Sell). The company is also a part of the Zacks Retail – Restaurant industry, which is currently ranked in the bottom 15% of all Zacks industries.Image Source: Zacks Investment ResearchLet’s take a closer look at how the company currently stacks up.Time For a Turnaround?Starbucks posted mixed results relative to our consensus expectations in its latest quarterly release, with adjusted EPS of $0.52 falling short of our consensus estimate by roughly 5.5%. Quarterly sales totaled $9.5 billion, beating our estimate by nearly 3%.Weakening sales growth has been a major challenge for the company in recent years. The trend was partly evident again in its latest release, with global comparable store sales increasing just 1% year-over-year and its North America and US store locations seeing flat growth.But while the recently-reported 1% YoY sales growth rate remains unimpressive, it’s a notable improvement relative to recent periods, as shown below. Please note that the chart tracks the YoY % change in sales, not actual sales figures.Image Source: Zacks Investment ResearchAs reflected in the chart above, the top line crunch could be nearing its end for SBUX, a key development to keep note of. Continued acceleration in sales would be key to maintaining a sustainable uptrend in the stock, with the margin picture also remaining critical.The company remains confident in the continued turnaround as well, with CFO Cathy Smith remaining bullish in the recent earnings commentary –‘Q4 was a milestone quarter in getting ‘Back to Starbucks’, having delivered global comp growth for the first time in seven quarters. We know this continues to be a multi-year turnaround. We remain focused on driving our topline while managing the costs that are within our control to deliver durable, sustainable growth and long-term shareholder value.’Bottom LineAnalysts' negative earnings estimate revisions, resulting from a growth cooldown, paint a challenging picture for the company’s shares in the near term.Starbucks SBUX is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy). These stocks sport a notably stronger earnings outlook and the potential to deliver explosive gains in the near term#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Starbucks Corporation (SBUX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks